IDEAS home Printed from https://ideas.repec.org/a/sae/envira/v37y2005i2p331-353.html
   My bibliography  Save this article

Do Localization Economies Matter in Cluster Formation? Questioning the Conventional Wisdom with Data from Indian Metropolises

Author

Listed:
  • Sanjoy Chakravorty

    (Department of Geography and Urban Studies, 310 Gladfelter Hall, Temple University, Philadelphia, PA 19122, USA)

  • Jun Koo

    (Cleveland State University, Maxine Goodman Levin College of Urban Affairs, Cleveland, OH 44115, USA)

  • Somik V Lall

    (Development Research Group, The World Bank, Washington, DC 20433, USA)

Abstract

The large and growing literature on industrial clustering suggests that firms seek locations that provide localization economies (benefits from having common buyers and suppliers, a specialized or skilled labor pool, and informal knowledge transfers). This study of manufacturing industry clusters in three Indian metropolises suggests instead that industry location decisions are guided by market imperfections, specifically rigidities in the land market caused by state action (segregationist or environmental policies, the absence of exit policies, and activist industrial promotion policies). For the investigation the authors use geographically disaggregated industry location and size data from Mumbai, Kolkata, and Chennai, to analyze eight industrial sectors (food and beverages, textiles, leather, printing and publishing, chemicals, metals, machinery, and electrical and electronics). The authors test for evidence of global and local clustering and distinguish between and test for coclustering and colocation of industries. The results are indicative rather than absolute and suggest that for location decisions general urbanization economies are more important than are localization economies.

Suggested Citation

  • Sanjoy Chakravorty & Jun Koo & Somik V Lall, 2005. "Do Localization Economies Matter in Cluster Formation? Questioning the Conventional Wisdom with Data from Indian Metropolises," Environment and Planning A, , vol. 37(2), pages 331-353, February.
    • Handle: RePEc:sae:envira:v:37:y:2005:i:2:p:331-353
    DOI: 10.1068/a373
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1068/a373
    Download Restriction: no
    File URL: https://libkey.io/10.1068/a373?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Ellison, Glenn & Glaeser, Edward L, 1997. "Geographic Concentration in U.S. Manufacturing Industries: A Dartboard Approach," Journal of Political Economy, University of Chicago Press, vol. 105(5), pages 889-927, October.
    2. Ron Martin & Peter Sunley, 2003. "Deconstructing clusters: chaotic concept or policy panacea?," Journal of Economic Geography, Oxford University Press, vol. 3(1), pages 5-35, January.
    3. Sanjoy Chakravorty, 2000. "How Does Structural Reform Affect Regional Development? Resolving Contradictory Theory with Evidence from India," Economic Geography, Taylor & Francis Journals, vol. 76(4), pages 367-394, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kumar, Sudesh, 2005. "Development of Industrial Cluster," MPRA Paper 171, University Library of Munich, Germany, revised 30 Sep 2005.
    2. Josep-Maria Arauzo-Carod & Elisabet Viladecans-Marsal, 2009. "Industrial Location at the Intra-Metropolitan Level: The Role of Agglomeration Economies," Regional Studies, Taylor & Francis Journals, vol. 43(4), pages 545-558.
    3. Ugo Fratesi, 2008. "Issues in the Measurement of Localization," Environment and Planning A, , vol. 40(3), pages 733-758, March.
    4. Eva Coll‐Martínez & Ana‐Isabel Moreno‐Monroy & Josep‐Maria Arauzo‐Carod, 2019. "Agglomeration of creative industries: An intra‐metropolitan analysis for Barcelona," Papers in Regional Science, Wiley Blackwell, vol. 98(1), pages 409-431, February.
    5. M.R. Narayana, 2014. "Growth Effects of Industrial Clusters," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 15(1), pages 71-92, March.
    6. José A. Borello & Hernán Morhorlang & Diego Silva Failde, 2011. "Agglomeration Economies in Semi-industrialized Countries: Evidence from Argentina," Institutions and Economies (formerly known as International Journal of Institutions and Economies), Faculty of Economics and Administration, University of Malaya, vol. 3(3), pages 487-518, October.
    7. Sabyasachi TRIPATHI, 2014. "Estimating Urban Agglomeration Economies for India: A New Economic Geography Perspective," Theoretical and Empirical Researches in Urban Management, Research Centre in Public Administration and Public Services, Bucharest, Romania, vol. 9(2), pages 5-34, May.
    8. Sabyasachi TRIPATHI, 2017. "How To Develop An Equitable Distribution Of Urban Gdp By Smart City Development In India," Regional Science Inquiry, Hellenic Association of Regional Scientists, vol. 0(2), pages 131-146, December.
    9. Sabyasachi TRIPATHI & Shamika KUMAR, 2017. "Determinants Of Firm Location Choice In Large Cities In India: A Binary Logit Model Analysis," Theoretical and Empirical Researches in Urban Management, Research Centre in Public Administration and Public Services, Bucharest, Romania, vol. 12(3), pages 45-62, April.
    10. Josep-Maria Arauzo-Carod & Elisabet Viladecans-Marsal, 2009. "Industrial Location at the Intra-Metropolitan Level: The Role of Agglomeration Economies," Regional Studies, Taylor & Francis Journals, vol. 43(4), pages 545-558.
    11. Elisabet Viladecans Marsal & Josep Maria Arauzo Carod, "undated". "Industrial Location at the Intra-metropolitan Level: A Negative Binomial Approach," Studies on the Spanish Economy 224, FEDEA.
    12. Richard G Funderburg & Xiaoxue Zhou, 2013. "Trading Industry Clusters amid the Legacy of Industrial Land-Use Planning in Southern California," Environment and Planning A, , vol. 45(11), pages 2752-2770, November.
    13. Ana Moreno-Monroy, 2012. "Critical Commentary. Informality in Space: Understanding Agglomeration Economies during Economic Development," Urban Studies, Urban Studies Journal Limited, vol. 49(10), pages 2019-2030, August.
    14. Abhinav Alakshendra & Ziming Li, 2020. "Local Governments’ Impact on Market Accessibility of Enterprises: Understanding the Location Choices of Enterprises in Hajipur, India," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 63(1), pages 119-142, March.
    15. Tripathi, Sabyasachi, 2015. "Do upcoming “Smart cities” need to provide smart distribution of higher urban economic growth? Evidence from Urban India," MPRA Paper 61527, University Library of Munich, Germany.
    16. Ana Isabel Moreno-Monroy & Gustavo Adolfo García Cruz, 2016. "Intra-Metropolitan Agglomeration of Formal and Informal Manufacturing Activity: Evidence from Cali, Colombia," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 107(4), pages 389-406, September.
    17. Gaurav Bhattacharya, 2019. "Location decisions of industries in the presence of transportation costs and environmental regulations: empirical evidence from India," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 21(1), pages 24-53, June.
    18. Tripathi, Sabyasachi & Kumar, Shamika, 2016. "Determinants of firm location choice in metropolitan cities in India: A binary Logit model analysis," MPRA Paper 73995, University Library of Munich, Germany.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cassandra C Wang & George C S Lin & Guicai Li, 2010. "Industrial Clustering and Technological Innovation in China: New Evidence from the ICT Industry in Shenzhen," Environment and Planning A, , vol. 42(8), pages 1987-2010, August.
    2. Nicole Litzel & Joachim Möller, 2011. "Industrial Clusters and Economic Integration: Theoretic Concepts and an Application to the European Metropolitan Region Nuremberg," Chapters, in: Miroslav N. Jovanović (ed.), International Handbook on the Economics of Integration, Volume II, chapter 12, Edward Elgar Publishing.
    3. Kubis, Alexander & Titze, Mirko & Brachert, Matthias & Lehmann, H. & Bergner, U., 2009. "Regionale Entwicklungsmuster und ihre Konsequenzen für die Raumordnungspolitik," IWH-Sonderhefte 3/2009, Halle Institute for Economic Research (IWH).
    4. Lu, Ren & Ruan, Min & Reve, Torger, 2016. "Cluster and co-located cluster effects: An empirical study of six Chinese city regions," Research Policy, Elsevier, vol. 45(10), pages 1984-1995.
    5. Junfu Zhang, 2007. "Access to Venture Capital and the Performance of Venture-Backed Start-Ups in Silicon Valley," Economic Development Quarterly, , vol. 21(2), pages 124-147, May.
    6. Edilberto Tiago Almeida & Raul Mota Silveira Neto & Jaime Macedo Brito Bastos & Rubens Lopes Pereira Silva, 2021. "Location patterns of service activities in large metropolitan areas: the Case of São Paulo," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 67(2), pages 451-481, October.
    7. Peter Maskell & Leïla Kebir, 2005. "What qualifies as a cluster theory?," DRUID Working Papers 05-09, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    8. Aviad Pe'er & Ilan Vertinsky & Thomas Keil, 2016. "Growth and survival: The moderating effects of local agglomeration and local market structure," Strategic Management Journal, Wiley Blackwell, vol. 37(3), pages 541-564, March.
    9. Oliver Falck & Stephan Heblich & Stefan Kipar, 2008. "The Extension of Clusters: Differences-in-Difference Evidence from the Bavarian State-Wide Cluster Policy," Jena Economics Research Papers 2008-073, Friedrich-Schiller-University Jena.
    10. Jürgen Essletzbichler, 2005. "Diversity, stability and regional growth in the U.S. (1975-2002)," Papers in Evolutionary Economic Geography (PEEG) 0513, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Sep 2005.
    11. Kristian Behrens, 2016. "Agglomeration and clusters: Tools and insights from coagglomeration patterns," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 49(4), pages 1293-1339, November.
    12. Blandinieres, Florence & Krieger, Bastian & Pellens, Maikel, 2021. "Cluster support activities in the German biotechnology sector," ZEW Expertises, ZEW - Leibniz Centre for European Economic Research, number 233052, September.
    13. Olivier Brossard & Inès Moussa, 2012. "The trilogy of knowledge spillovers in French regions: a history of nature, channels and boundaries," Papers in Evolutionary Economic Geography (PEEG) 1207, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised May 2012.
    14. Jing Chen, 2020. "The Impact of Cluster Diversity on Economic Performance in U.S. Metropolitan Statistical Areas," Economic Development Quarterly, , vol. 34(1), pages 46-63, February.
    15. Christoph Stich & Emmanouil Tranos & Max Nathan, 2023. "Modeling clusters from the ground up: A web data approach," Environment and Planning B, , vol. 50(1), pages 244-267, January.
    16. Rachel Guillain & Julie Le Gallo, 2010. "Agglomeration and Dispersion of Economic Activities in and around Paris: An Exploratory Spatial Data Analysis," Environment and Planning B, , vol. 37(6), pages 961-981, December.
    17. Mirko Titze & Matthias Brachert & Alexander Kubis, 2011. "The Identification of Regional Industrial Clusters Using Qualitative Input-Output Analysis (QIOA)," Regional Studies, Taylor & Francis Journals, vol. 45(1), pages 89-102.
    18. Thomas Brenner, 2017. "Identification of Clusters - An Actor based Approach," Working Papers on Innovation and Space 2017-02, Philipps University Marburg, Department of Geography.
    19. Henry Wai‐Chung Yeung, 2009. "Transnational Corporations, Global Production Networks, and Urban and Regional Development: A Geographer's Perspective on Multinational Enterprises and the Global Economy," Growth and Change, Wiley Blackwell, vol. 40(2), pages 197-226, June.
    20. Stefan Kipar, 2012. "Determinants of Firm Innovation - Evidence from German Panel Data," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 45.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:envira:v:37:y:2005:i:2:p:331-353. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.